Ministers declared last week that universal credit was “working”, but on Friday the Greater Manchester mayor, Andy Burnham, said the number of rough sleepers in the city could at least double this winter unless Theresa May halted the much-criticised rollout.

The National Housing Federation, which represents 900 housing associations in England, said universal credit was presenting a “significant challenge” to landlords as they worked to keep tenants from becoming homeless.

Quick guide

What is universal credit and what are the problems?

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What is universal credit?

Universal credit (UC) is the supposed flagship reform of the benefits system, rolling together six benefits (including unemployment and benefits, and tax credits) into one, online-only system. The theoretical aim, for which there was general support across the political spectrum, was to simplify the system and increase the incentives for people to move off benefits into work.

The original design set out a minimum 42-day wait for a first payment to claimants when they moved to UC (in practice this is often up to 60 days). After sustained pressure, the government announced in the autumn 2017 budget that the wait would be reduced to 35 days from February 2018. This will partially mitigate the impact on many claimants of having no income for six weeks. The wait has led to rent arrears and evictions, hunger (food banks in UC areas report notable increases in referrals), use of expensive credit and mental distress.

Ministers have expanded the availability of hardship loans (now repayable over a year) to help new claimants while they wait for payment. Housing benefit will now continue for an extra two weeks after the start of a UC claim. However, critics say the five-week wait is still too long and want it reduced to two or three weeks.

Are there other problems?

Plenty. Multibillion-pound cuts to work allowances imposed by the former chancellor George Osborne mean UC is far less generous than originally envisaged. According to the Resolution Foundation thinktank, about 2.5m low-income working households will be more than £1,000 a year worse off when they move to UC, reducing work incentives.

Landlords are worried that the level of rent arrears accrued by tenants on UC could lead to a rise in evictions. It's also not very user-friendly: claimants complain the system is complex, unreliable and difficult to manage, particularly if you have no internet access.

And there is concern that UC cannot deliver key promises: a critical study found it does not deliver savings, cannot prove it gets more people into work, and has plunged vulnerable claimants into hardship.

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Croydon council in south London, which piloted the universal credit full service, renewed its calls for a pause in the rollout. It said it would spend £3m this year helping thousands of tenants in arrears to avoid eviction, and said the 50% increase in support costs was unsustainable.

“The government needs to slow down this full rollout process and consider lessons from pilot areas like ours or face a bad situation becoming much worse,” said Alison Butler, the council’s deputy leader and cabinet member for homes, regeneration and planning.

Meanwhile, a Guardian investigation into people’s experiences of universal credit suggests there are widespread fears of eviction compounded by stressful and frustrating interactions with benefits bureaucracy.

Claimants worry they will be made homeless because of rent arrears accumulated over the minimum 42-day wait for a first benefit payment. Others say the stress of dealing with the system, and its impact on their finances, has affected their mental health.

Although the principle of universal credit was widely welcomed as a way of simplifying the benefits system, there is increasing concern that in practice its complexity and design shortcomings are failing some of the very people it was meant to help.

“If claimants fall foul of just one of the many confusing rules, punishing pay schedules or unreliable computer systems dotted around this assault course, we know the outcome in all too many cases is either grinding poverty or destitution,” said Frank Field, the chair of the Commons work and pensions committee.

The work and pensions secretary, David Gauke, has rejected calls – including from 14 backbench Tory MPs – to pause the rollout while design flaws are fixed. In his party conference speech he described universal credit as a step towards a Tory vision of the modern welfare state that was “compassionate, practical and aspirational”.

However, landlords are already reporting universal credit-related evictions, although many insist they open proceedings as a last resort and often only when tenants refuse to engage with attempts to help them settle arrears. A possession order is just the first stage and does not automatically lead to an eviction.

Halton Housing Trust, a fifth of whose households are now on the full digital universal credit service, has reported a 100% increase year on year in the number of tenants against whom it has started eviction proceedings. Seven tenants owed arrears of at least £2,000 more than they had before going on to the benefit.

Croydon council said it would spend an extra £1m this year to protect tenants from homelessness. In the first quarter of this year it issued 959 special housing payments to help households maintain tenancies, compared with 529 in the same period last year. Without this support, hundreds of tenants would have become homeless, it said.

Gloucester City Homes, which has been operating the interim universal credit service, has evicted eight tenants, or 12% of all those in receipt of universal credit. In one case, a “model tenant” who always paid on time received a possession notice after an eight-week wait for payment led him into arrears of more than £500.

Curo Group housing association in Bath, with 16 months’ experience of universal credit, has sought 160 court orders against tenants since April, up from 130 in the same period the previous year. It says it will not always take action against tenants it knows have fallen into arrears directly as a result of universal credit payment delays.

Sarah Seeger, the head of customer accounts at Curo, said: “We have a concern that the rapid expansion will put the universal credit system under severe pressure and we’ll see a deterioration of the quality and timeliness of the service, the consequences of which will be very difficult to manage for customers on low or in some cases no income.”

Landlords say continuing increases in the number of tenants going into arrears as universal credit is rolled out are financially unsustainable and will affect the ability to build new homes. Many landlords have increased the levels of cash they have to set aside to cover bad debts related to arrears.

Sue Ramsden, head of policy at the National Housing Federation, said housing associations were working hard with tenants to sustain tenancies and minimise arrears. “The introduction of universal credit is presenting a significant challenge for housing providers and their tenants,” she said. “Despite some assurances from the Department for Work and Pensions that the process to assess claims has improved, we still have real concerns around the impact of the long wait for families on very low incomes to receive the benefit.”

A DWP spokesperson said: “The best way to help people pay their rent is to help them into work and under universal credit people are moving into work faster and staying in work longer than under the old system. We also know that over time people adjust to managing monthly payments, and clear their arrears.

“We continue to work closely with landlords, local authorities and other organisations to ensure claimants are supported. The majority of people are comfortable managing their money but budgeting advice, benefit advances and direct rent payments to landlords can be provided for those who need it.”

Scotland calls for halt on universal credit

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The Scottish government, which has called for a halt to universal credit, has used its devolved powers to introduce flexibilities to the way the new benefit is administered in an attempt to prevent rent arrears and make it easier for tenants to cope with the financial shock of the switch.

Scottish tenants moving to universal credit will be able to choose to be paid fortnightly and request that the housing benefit element is paid directly to their landlord. Many tenants, especially those who are used to weekly or fortnightly budgets, have struggled to budget using a system that pays people on a monthly basis.

Scotland’s minister for social security, Jeane Freeman, said: “We have no powers to deal with the worst aspects of universal credit, including delayed payments, cuts to the work allowances, and the appalling ‘rape clause’ applied to the tax credits within universal credit. But where we do have powers, we act to improve where we can this flawed UK benefit.”

The Guardian’s investigation found common reports of problems such as incorrect and irregular payments to claimants, claims being closed without explanation, myriad IT errors, difficulties in contacting benefits officials and lengthy waits for mistakes to be corrected.

'In a year, not one payment correct': a council tenant on universal credit misery

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The investigation heard accounts from 68 claimants. Their stories tallied closely with the findings of surveys by charities such as Citizens Advice and evidence from claimants submitted to the Commons work and pensions select committee.

Several claimants complain about the high cost of using an official 0345 helpline to try to resolve benefit errors. One told the Guardian: “Not only does it cost money to get through, my maximum [call length] has been just shy of an hour. Not great when you can’t buy a tin of beans to keep you alive.”

A common complaint is that some universal credit staff struggle with the complicated rules. Some claimants report they have been given contradictory advice by different officials for the same problem.

One self-employed businessman told the Guardian: “I spend an insane amount of time dealing with universal credit and still have to chase my payments every month when [they] are not paid. Having everything in one place is theoretically a good idea. In reality, it is incredibly frustrating.”

Another person said the system was not responsive to the very different needs and circumstances of claimants. “It claims to be an easy system that benefits everyone and gives you a fair assessment. However, it extricates human interaction from the process and in doing so cannot cater to individual needs and cases.”

There are signs that claimants do not welcome the prospect of moving into the new system. One respondent reported that she anticipated having no money for the Christmas period after she moves on to universal credit at the end of November, when her son turns five and her benefit circumstances change.

“Universal credit will give me a loan [to tide her over the six-week waiting period for a first payment] but that is just putting me in more debt than I’m already in. I don’t think I can afford to pay it back. So how can I feed us and heat our house up, as well as get my son some presents for Christmas?”